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Accounting, Finance, SPSS
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Advanced Corporate Finance: Tesco PLC

Coursework Instructions:

The assignment is a report on Tesco PLC.
(LON: TSCO)
1. You are required to present a critical overview of its overall corporate strategy, with particular emphasis on its growth strategy, looking at both investment and financing decisions/ policies. For instance, does the company prefer to grow internally or externally? What type(s) of firms or businesses do they acquire? Are they trying to diversify or consolidate their core business? What is their capital structure? Do they hold a lot of cash? Is this standard in their industry group? Etc. For this you need to read as much as possible about the company, including their latest annual report and any news/reports from reliable sources (Bloomberg, Financial Times, etc.). Your analysis should be as forward-looking as possible, i.e., what is their strategy for the next 5 years? An industry/SWOT analysis might help you. It is recommended to include graphs/tables (clearly labelled with data source) as visual aids here.
2. Identify a potential and realistic M&A target that would fit the company’s growth and/or diversification strategy (can be horizontal, vertical and/or conglomerate acquisitions). Clearly justify your choice and the criteria used to make your recommendation. For instance, how big is the target relative to the acquirer? What type(s) of synergies exist between the two businesses? Are there any diversification benefits? Is the acquisition risky (i.e., likely to fail)? Is the target already owned by another company, or by a majority shareholder? Does the proposed acquisition comply with relevant competition legislation?
3. Critically evaluate different valuation methods and identify the most appropriate method for your chosen target. For instance, is the target private or public? Can you gather enough financial data about the target’s size/performance? Does it have suitable comparables? Etc. You need to compare and contrast at least 3 different valuation techniques before providing your final recommendation.
4. Considering the current capital structure and financial statements of both the acquirer and the target, propose an informed solution for financing this acquisition. For instance, can the acquirer take on any more debt? Is this beneficial for them? Or should they pay with cash and/or equity? Why or why not?
5. Collect relevant financial data from reliable sources (FMS, DataStream, annual reports, etc.) and calculate a reasonable acquisition price for the target (can be a narrow range). Clearly explain any assumptions made when applying your chosen valuation technique. Make sure to include all workings in an Appendix.
Present your report in a suitable business report format: Include a cover page (with module title and code, assignment title and word count), page numbers, table of content, executive summary, explicit headings. A reference list is optional and only if you reference/quote external sources (e.g. academic/ newspaper articles, textbooks). The report should be clearly written in proper English, the use of any business/scientific jargon clearly explained. Formatting Guidelines: font size 12, text alignment: justify, line spacing: 1.5 or 2

Coursework Sample Content Preview:

ADVANCED CORPORATE FINANCE: TESCO PLC
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Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc85810406 \h 3Introduction PAGEREF _Toc85810407 \h 4Tesco SWOT Analysis PAGEREF _Toc85810408 \h 4i.Strengths PAGEREF _Toc85810409 \h 4ii.Weaknesses PAGEREF _Toc85810410 \h 5iii.Opportunities PAGEREF _Toc85810411 \h 5iv.Threats PAGEREF _Toc85810412 \h 5Potential and Realistic M&A Target PAGEREF _Toc85810413 \h 5ASDA Valuation PAGEREF _Toc85810414 \h 6How to Finance the Acquisition PAGEREF _Toc85810415 \h 7Reasonable Acquisition Price PAGEREF _Toc85810416 \h 8Conclusion PAGEREF _Toc85810417 \h 9Bibliography PAGEREF _Toc85810418 \h 11Appendix PAGEREF _Toc85810419 \h 12ASDA’s Reasonable Acquisition Price as at 2019 Financial Year: PAGEREF _Toc85810420 \h 12
Executive Summary
Tesco PLC is among the reputable food retailers a customer would ever want to purchase from. Besides running a private labeled brand, the company offers brick and mortar supermarkets, and online retailing across Europe and Asia. Indeed, the company has taken over several well-established enterprises across the globe, leading to its growth to one of the largest most profitable online grocery stores. The author assesses the company’s SWOT to attain viable information that would help to suggest the best merger and acquisition price for the company. Besides, the merger and acquisition target are valuated and the information becomes helpful in determining the reasonable price of acquisition and the potential payment strategy for the project. However, this strategy is limited to the targets premium value and standalone price, which implies that the targets debts are omitted.
Tesco PLC
Introduction
Tesco PLC is among the reputable food retailers a customer would ever want to purchase from. Besides running a private labeled brand, the company offers brick and mortar supermarkets, and online retailing across Europe and Asia. Despite offering a variety of food and non-food products, the organization provides insurance and retail banking services through the Tesco Bank, located in the United Kingdom. As a result, Tesco has remained among the leading grocery retailers with at least twenty-five percent of the market share. The company’s financial statements reveal that the organization realized over fifty billion dollars in revenue from its outlets in the United Kingdom and the Republic of Ireland alone—and expects a steady increase in its cash revenues annually. The author evaluates Tesco’s growth strategy to recommend the most appropriate merger or acquisition option by a potential acquirer.
Tesco SWOT Analysis
* Strengths
Tesco’s operations can be dated back to 1919 when the company had already started selling surplus groceries. Today, Tesco is among the world’s most renowned food store retailers operating its line of stores in over twelve countries giving it over 25% market share. With hundreds of thousands of employees to offer customer services, the company services millions of families through the physical stores as well as the online services (Biznews, 2021). Indeed, the company has tak...
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